NEW JERSEY INSTITUTE OF TECHNOLOGY
DEPARTMENT OF ENGINEERING TECHNOLOGY
INDUSTRIAL COST ANALYSIS: MNET 414-001
Instructor:
Dr.
Email: sengupta@njit.edu, Website: http://web.njit.edu/~sengupta
Classes: Thursday 10:00-12:55PM, KUPF 108
Office hours: Monday 10:30 am to 11:55 am, other time by appointment
Textbook:
Engineering economic analysis, Tenth edition by D.G. Newnan et al.
Course objective: This course will teach you the techniques used in justifying a capital expenditure decisions in industry. You will learn: (1) Different types of manufacturing and product costs, and the decision making process for a capital expenditure, (2) Concepts of time value of money, (3) Use of several economic analysis models: present worth, uniform cost, rate of return analyses etc. (4) How to take into account the effects of depreciation, income tax on such economic analyses, and (5) How to perform a replacement analysis of an existing equipment. This course will be fairly mathematical. Mostly the concepts and theories will be learned through solving numerical problems.
Course
outline
|
Class |
Date |
Topic |
Home work |
|
1 |
9/3 |
Introduction to engineering economy. Compound interest, single series formulas |
|
|
2 |
9/10 |
Uniform series, Arithmetic and Geometric gradient formulas. |
|
|
3 |
9/17 |
Nominal and effective interest. Present worth analysis. |
|
|
4 |
9/24 |
Infinite analysis period and capitalized cost. More on present worth analysis. |
|
|
5 |
10/1 |
Test # 1 Annual cash flow analysis. |
|
|
6 |
10/8 |
More on annual cash flow analysis. Rate of return analysis. |
|
|
7 |
10/15 |
Incremental analysis. Payback period analysis. |
|
|
8 |
10/22 |
Break even analysis, future worth analysis. Review of chapters. |
|
|
9 |
10/29 |
Test # 2. Depreciation. (LAST DAY TO WITHDRAW 11/2) |
|
|
10 |
11/5 |
More on depreciation. |
|
|
11 |
11/12 |
Income tax and after tax cash flow analysis. |
|
|
12 |
11/19 |
After tax cash flow analysis. Replacement analysis. |
|
|
13 |
11/24 T |
Inflation. |
|
|
14 |
12/3 |
Review |
|
|
15 |
TBA |
Final Exam |
|
Grading
Test 1 - 30%, Test 2 -
30%, Final-30%, Homework & Attendance -10%.
A: 90% and above; B+:
85-89%, B: 80-84%, C+: 75-79%, C: 70-74%, D: 60-69%, F: Below 60%.
Lateness
& attendance policies
You are strongly encouraged to come in time
for the lectures and not to miss any lecture. If you come late and the lecture
has started, you may find it difficult to follow the lecture. Consequently you
may loose interest in the subject. Also, late entries cause a general
disruption of the lecture and thus affect the whole class. If you are absent,
then it is your responsibility to catch up on the topics discussed in the class
you missed and to solve the homework assignments due in time. If you miss a
lecture, it generally takes about three to four times more effort to grasp the
subject matter from the book. Frequent lateness or absenteeism will adversely
reflect on your final grade. Conversely, on time and good attendance may give
you some extra advantage towards your final grade.
Homework
assignments
The homework assignments will be collected and
graded. The solution of homework problems will be discussed in the class and
the solutions will be posted in the web (www-ec.njit.edu/~sengupta) after the
due dates. You can download the solutions to homework from web. You are
strongly recommended to do the homework assignments well ahead of the due dates
to understand the subject matter and follow the subsequent lectures.
Computer
use
You are expected to have an access to a
personal computer with a spreadsheet program such as Excel. Use of spreadsheet
financial functions will be discussed in the lecture. The textbook provides
many examples on Excel spreadsheet applications on the subject matter. If you
need hands-on assistance on use of spreadsheet financial functions, you must
make an appointment with me and come to my office for a
demonstration. You are strongly encouraged to use of the
spreadsheet software. Many tedious calculations in economic analysis can
be simplified using spreadsheet financial functions. It will come handy for the
economic analysis calculations in verifying many homework problems.
However, you will not be able to use such software during exams.
Tests
The tests will be closed book and closed note
exams. You will be allowed to bring one 8"x11" page cheat sheet.
Financial tables will be supplied with the exams, when necessary. Mostly
the exams will involve solving seven to eight numerical problems covering the
subject area. The exams will be cumulative. Exams may not be missed for the
convenience of the student. If
you must miss one of the exams, and you have a University excused absence
(medical, death in the immediate family, legal entanglement, or authorized
university business), you may seek permission to take a make-up exam. You should know
that the professor scrutinizes these requests very carefully and prior notice
of the absence is an important element in the decision. If for any reasons
beyond your control you must miss the final exam, you may apply for a grade of
incomplete (I) in the course.